|How Coverage Is Split Between You and Your Plan|
|Plan Level||The Plan Pays||You Pay|
Bronze plans, for example, provide the lowest level of coverage (60%) but have the lowest monthly premiums. As the plan level increases, so do the coverage and your monthly premium.
Even within the same metallic level, you’ll still be able to choose from several coverage options. These options affect both your premiums and out-of-pocket costs for deductibles, copayments, and coinsurance. Because the Marketplace allows various private insurers to offer plans, a plan from one company may cost more or less than the same plan offered by a different insurer.
For example, a Silver plan from one company may cost you more upfront for your monthly deductible, but your out-of-pocket expenses will be much lower. Conversely, a Silver plan from another insurer could cost less each month, but you’ll pay more for healthcare expenses because of the higher deductible, copayment, and coinsurance amounts.
How to Reduce the Costs of Marketplace Insurance
Depending on your modified gross adjusted income (MAGI) and your family size, you may be eligible for the advance premium tax credit or a cost-sharing reduction. Both of these programs will reduce the cost of your healthcare.
A cost-sharing reduction is a discount available on Silver plans only. This reduction can help lower your out-of-pocket costs for:
- Deductibles: The amount you owe for covered services before health insurance kicks in.
- Copayments: A fixed amount you pay for covered healthcare services.
- Coinsurance: Your share of the costs of covered healthcare service.
- Out-of-Pocket Maximum: The most you’ll pay in a year for covered health expenses.
For example, say you visit the doctor and are charged $100. With your particular Silver plan, you normally have a copay of $25. Because you qualify for cost-sharing reductions and choose a Silver plan through the Marketplace, your copay may be as low as $5.
Similarly, if your plan has a $3,500 deductible, it may be lowered to $500 with cost-sharing reductions. Essentially, you pay for a Silver plan, but receive the increased coverage of a higher metallic level plan, reducing your out-of-pocket expenses.
Cost-sharing reductions are available only to the following people:
- People who don’t qualify for public coverage such as Medicaid or the CHIP
- People who can’t get qualified health insurance through an employer. If your employer offers healthcare insurance, you can’t get a cost-sharing reduction.
- People whose incomes fall between 100% and 250% of the federal poverty level (FPL)
The cost-sharing reduction and advance premium tax credit subsidies are not automatic: You must apply for them on the Health Insurance Marketplace.
Advanced Premium Tax Credit
Many more people qualify for an advance premium tax credit, which lowers your monthly health insurance bill for coverage bought through the Marketplace. With this credit, you can choose any metallic-level plan in the Marketplace.
To be eligible for the advance premium tax credit:
- You must be ineligible for public coverage.
- You must be unable to get qualified health insurance through your employer.
- Your income usually must fall between 100% and 400% of the federal poverty level.
The American Rescue Plan Act gave more people access to this credit for 2021 and 2022. The act also increased the level of support for many who already qualified. Although it was set to expire in January 2023, the availability of this credit was expanded to 2025 with the passage of the Inflation Reduction Act of 2022.
Premium tax credits are sent directly from the government to your health insurer to lower your monthly premium. If you qualify, you can decide how much of the credit to apply to your premium each month (up to 100%).
When you file your annual tax return, you’ll reconcile the premium tax credits you received and the actual amount you qualify for based on your final income for that year. If you’ve taken more payments than you’re eligible for, you may have to pay the money back when you file your return. If you should have taken more, however, you may get a refund.
HealthCare.gov has an online tool that shows the subsidy you might receive based on your income, the number of adults and children enrolling in coverage, and your state.
The White House and Advanced Premium Tax Credit
The application of the advance premium tax credit was changed for 2021 and 2022 with the American Rescue Plan Act of 2021 by increasing eligibility for all income brackets for these years. Although set to expire in January 2023, the White House’s Inflation Reduction Act extended the availability of the credit until 2025.
Here’s how it works:
- Families whose incomes exceed 400% of the FPL can claim these credits.
- No family will pay more than 8.5% of their household income toward the cost of the benchmark or less expensive plan. This means many consumers qualify for higher tax credits to help cover their Marketplace health plan premiums.
People across all household income levels can expect lower premiums as a result of receiving more tax credits to reduce plan prices. In fact, many low-income families and individuals can choose from $0 premium plans after tax credits.
This extension was automatically applied to all plans available through HealthCare.gov starting on April 1, 2021, and it extends through 2025 under the Inflation Reduction Act. This means new consumers and current enrollees who submit an application and select a plan on or after April 1 will receive the increased premium tax credits for Marketplace coverage.
Be sure to check if you can lower your health insurance with premium tax credits even if you already have a plan with the Marketplace. You may be able to update your application to get new eligibility results for credits. Reselect your current plan for the changes to take effect to reduce your premiums for the remainder of the year. But be careful because if you do this, you reset your deductible. So if you’ve already met it for the year you may have to pay more in copayments and coinsurance. Make sure you check this before you reselect your plan.
Choosing Catastrophic Coverage
When you fill out an application online, you might see catastrophic plans listed among your plan options. You may be eligible for a catastrophic plan if you’re under 30 years old or if you qualify for a hardship exemption because you can’t afford health coverage. This is determined during the application process and is based on your family size and income.
A catastrophic health plan covers three primary care visits per year before the deductible is met. It also covers preventive services at no cost to you. The premium you pay each month should be considerably lower than for other plans, but the out-of-pocket costs (deductibles, copayments, and coinsurance) are generally much higher.
If you qualify for and choose a catastrophic plan, you won’t be eligible for cost-sharing reductions or premium tax credits. Catastrophic plans cannot be purchased with premium subsidies.
Qualifying for Medicaid
Depending on your income and family size, you may qualify for Medicaid, a program that provides health coverage for eligible people in the following categories:
- Low-income individuals, families, and children
- Pregnant women
- Older people
- People with disabilities
Each state has its own rules about who qualifies for Medicaid. Under the ACA, Medicaid eligibility expanded in many states, and an increased number of people qualified for benefits. If you are eligible, you can get free or low-cost coverage, and you won’t need to buy a Marketplace plan.
Many states also have a separate program, called CHIP, which provides health insurance for uninsured children in low-income families who don’t qualify for Medicaid but still cannot afford private coverage.
To find out if you are eligible for Medicaid or CHIP benefits, fill out an application on the Health Insurance Marketplace. You can also visit your state’s Medicaid website to apply and find out if you qualify.
What Are State Healthcare Exchanges?
State healthcare exchanges, also known as state healthcare marketplaces, allow individuals and small businesses to compare and purchase health insurance options. Though offered by private insurers, these policies follow the coverage guidelines and criteria outlined in the Affordable Care Act. In 17 states and the District of Columbia, residents seeking such policies go through these state exchanges. Americans in other states purchase health insurance through the federal government’s marketplace.
Can I Refuse Health Insurance From My Employer and Get Obamacare?
Yes. The Affordable Care Act ensures that almost all Americans can buy individual and family health insurance from its online Marketplace. Be careful, though. If you refuse health insurance from your employer, you most likely will not qualify for any subsidies, tax credits, or other financial assistance. The only way you might be eligible is if one of the following applies:
- Your employer-sponsored health plan doesn’t meet the “minimum value standard” of coverage required by the ACA.
- The cheapest plan through your employer costs more than a certain percentage of your household income.
Even without the subsidy, though, a Marketplace plan may offer a more economical deal than your employer-based insurance, so always check the marketplace to make sure you’re not missing out on a better deal.
What Is the Income Limit for Marketplace Insurance?
Strictly speaking, there is no income limit for Marketplace insurance—anyone can purchase it. What is limited by income is the amount of the subsidy, or premium tax credit, you might qualify for to help pay for that insurance.
You qualify for subsidies if you pay more than 8.5% of your household income toward health insurance premiums—specifically, the cost of the Silver “benchmark plan” (the second-lowest-cost plan on the exchange).
The Bottom Line
Most individuals and families will be able to compare and buy their health coverage through the Health Insurance Marketplace.
After you fill out an application online, you can see if you qualify for Medicaid, CHIP, cost-sharing reductions, and/or premium tax credits. You will also find out if you are eligible for a catastrophic plan that charges lower premiums but higher out-of-pocket costs.
To find additional information regarding the Health Insurance Marketplace and extra savings, as well as state-specific information and how to apply in your state:
- Visit HealthCare.gov
- Call 1-800-318-2596
- Contact your current health insurance company